China is criticizing a new law passed by Taiwan's parliament that lets the island hold referendums on issues of sovereignty.

Beijing's first official reactions came via the state-run media and the government's Taiwan Affairs office, which says China is "gravely concerned" about the new Taiwanese law.

The government news service, Xinhua, says the law contains "hidden trouble" for cross-straits relations.

The law allows Taiwan's president to order referendums on sovereignty issues. But it also gives the legislature power to block most referendums.

The measure defeated a stronger ruling party initiative that would have given the president wider authority to call referendums.

Politics professor Yung Wei at Taipei's National Chiao-Tung University says the weaker law is a victory for the opposition Kuomintang, or KMT, party - which is against independence - and a defeat for the pro-independence party of President Chen Shui-bian.

"I think you have to view this move as a political move of the KMT to fend off the pressure of the government party to move off [the issue of] Taiwan's independence," he said.

China regards Taiwan as one of its provinces and it earlier warned the island's leaders that any move toward independence could prompt an attack.

In 1949, Chinese nationalists fled China for Taiwan after the communists took power during a civil war. China has never governed Taiwan, but it promotes what it calls a one-China policy, meaning that Taiwan will unite with the mainland some day.

Professor Yung Wei says Beijing, though upset by the legislation, has been tempered in its reaction.

"Beijing definitely is upset that this measure may one day be used for separatism," said Yung Wei.

But he says for now, China may want to avoid harsh language that could increase support for Taiwan's ruling party.

Observers say Chinese leaders are considering the implications that a cross-straits confrontation would have on relations with the United States, which has pledged to defend Taiwan.

Officials say Taiwan will be high on the agenda when Chinese Prime Minister Wen Jiabao goes to the United States next month.

Meanwhile, Taiwanese political battles are likely to escalate over the issue of independence, which has become a central theme in the run-up to the March presidential elections.

On Friday, Taiwanese Prime Minister Yu Shyi-kun said he might try to overturn the new law, complaining it gives too much power to the legislature.